Fresh call for crackdown on use of tax havens as UK's top firms found to be prolific users of offshore subsidiaries

Only two FTSE 100 companies do not have offshore subsidiaries based in tax havens, research from the charity ActionAid revealed today as it called on the Prime Minister and leaders of the G8 industrialised nations to do more to end tax avoidance by the world’s largest corporations.

ActionAid found Footsie companies had 22,000 offshore subsidiaries of which 40 per cent - more than 8,000 - were located in tax havens.

The findings come as David Cameron meets with US President Barack Obama to discuss a US-EU free trade agreement, which the Prime Minister believes would benefit the UK economy to the tune of £10billion a year and ahead of next month’s G8 Summit in Northern Ireland.

Tax avoidance: ActionAid's research found 98 out of the 100 companies that made up Britain's leading share index used offshore subsidiaries based in tax havens.

Writing in the Wall Street Journal today Mr Cameron said: ‘This deal could add as much as £10billion to the British economy and £63billion to US GDP. But the rest of the world would benefit too, with gains that could generate €100billion (£850billion) worldwide.’

The research also comes less than a month after Chancellor George Osborne warned the Cayman Islands and British Virgin Islands that they risked losing their status as British Crown dependencies if they did not end their tax haven status.

On Saturday, at a meeting of G7 finance minister the Chancellor repeated his call for international action to fight tax avoidance adding it was ’incredibly important that companies and individuals pay the tax that is due’.

However, ActionAid called for Britain to take a lead on the issue pointing out that one fifth of the world’s tax havens have enjoyed historic links to the UK government, more than any other nation.

The use of tax havens by multinational corporations has come in for significant criticism in the last year as companies such as Starbucks, Google, Vodafone and Amazon have all faced widespread protest while their top executives have faced a grilling by MPs over the amount of corporation tax they paid in the UK.

Starbucks was revealed to have paid nothing in corporation tax in the last three years despite sales of £400million in 2011 and had only paid £8.6million since it began trading in the UK 14 years ago.

ActionAid's research found 98 of the 100 companies that make up the blue chip index’s components have subsidiaries in tax havens, while ten of those companies were headquartered in a tax haven.

Moreover, despite 10 per cent of the FTSE 100’s composition having changed since ActionAid’s last analysis, all new entrants to the FTSE100 have subsidiaries in tax havens.

Banks were the most prolific users of tax havens. Over half (58 per cent) of all banks on the blue chip index, including Barclays Bank, HSBC and State-backed Lloyds Banking Group and Royal Bank of Scotland used overseas subsidiaries totalling 1,780 companies.

ActionAid said its research was not proof of tax avoidance, and stressed it was not accusing the companies in the Footsie of tax avoidance or evasion. But its findings did highlight the extent of multinationals’ operations in jurisdictions that could provide substantial tax advantages and help obscure information.

It added the vast majority of companies that make up the FTSE 100 – 78 out of 100 - operate in developing countries, and every one of these companies was a prolific tax haven user.

Developing countries constitute almost a third of the countries in which FTSE-100 banks operate, yet they have 13 times as many companies located in tax havens as in developing countries, ActionAid added.

The charity's tax justice policy adviser, Mike Lewis, said tax havens remained a key link in the chain that allowed multinational companies and wealthy individuals to drain billions from poor countries.

He said: ‘Tax havens are one of the biggest hidden obstacles in the fight against global poverty. Poor countries lose an estimated three times more money to tax havens than they receive in aid each year – money needed to build roads, fund schools and finance developing countries’ own fight against hunger and poverty.

‘Four years after G20 leaders promised an end to tax havens, tax haven structures are near-universal amongst the UK’s biggest multinationals.’

‘Now, with David Cameron promising action on tax havens at this year’s G8, the problem is on the UK’s doorstep. The UK is responsible for 1 in 5 of the world’s tax havens - that’s more than any other country.’

ActionAid said stopping wealth being siphoned out of the poorest countries into tax havens was one of the most urgent tasks in the fight against hunger. But transparency deals recently negotiated by the UK and other European countries with tax havens only benefited developed nations.

‘David Cameron convenes the G8 leaders in Northern Ireland next month. They must deliver on their promise to call time on tax havens for the benefit of all countries, including the poorest,’ Mr Lewis added.

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Fresh call for crackdown on use of tax havens as UK's top firms found to be prolific users of offshore subsidiaries